Current Category:The San Diego Union-Tribune | | November 28, 2017
Proposition 13 — the 1978 initiative putting a limit on property tax rates and how much they can increase each year — has long been ripped by critics who say it has starved the state of needed funding. But one Proposition 13 upside is rarely acknowledged: The initiative keeps retirees from having to pay crushing taxes as the value of their homes soars during one of California’s periodic housing bubbles.
This protection also has a downside: It makes aging homeowners feel as if they are financially trapped in their homes. Instead of moving to smaller properties after their children move out, couples stay put, suppressing the availability of single-family homes. To address this problem, two ballot measures were adopted in the decade after Proposition 13 — Propositions 60 and 90 — which allowed homeowners who are disabled or are 55 and older to move once without a tax penalty. They can buy a new home and pay their previous tax assessment if it is in the same county or is in one of 11 counties, including San Diego, which chose to accept “intercounty” transfers. To be eligible, a new home cannot have a higher value than the previous one.
Now the California Association of Realtors is sponsoring a ballot initiative that would allow those homeowners who are disabled or 55 and older to transfer their assessments as often as they wanted and require all 58 counties to participate. The new home could be more valuable than the previous one, with tax assessments adjusted upward under a formula blending old and new valuations.
The Legislative Analyst’s Office warns that the measure could eventually lead to $2 billion or more in lost annual tax revenue. Realtors challenge this assertion and point to the new revenue that would come in as older homes worth $500,000 and more are finally taxed at their current value.
This question needs more thorough study because the basic concept of the Realtors’ proposal makes considerable sense — at least if it can’t be readily gamed by wealthy people to limit their property taxes. Retirement security is a huge issue for millions of aging Californians on fixed incomes. Protecting this growing group is a good idea.Read at Original Source